In the fall of 2017, news broke that the Bank of Canada was raising its interest rate. Even though borrowers shouldn’t expect another hike this year, the rate seems to have reached a level that could affect a lot of Canadians and their financial situation. The new interest rate is a departure for Canadians who have been enjoying a lower rate for several years now.
How have Canadians responded to the new interest rate and what can they expect in the first two quarters of 2018? What does this rate hike mean for borrowers with a home equity loan or line of credit?
Have Canadians Adjusted?
Many Canadians saw their mortgage and loans become more expensive overnight, which shrank their cash flow and increased their monthly expenses. Even a half a percentage hike can apply quite a bit of pressure on borrowers.
Based on the changes to the housing market and early reports from the Bank of Canada, Canadians have adjusted well and might have even been prepared for a market adjustment.
The 2018 Interest Rate Outlook
After two rate increase, the remainder of 2017 should stabilize for borrowers, but early 2018 could see another rate increase. The Bank of Canada has been non-committal about what Canadians should be prepared for in 2018, but the door is open for more hikes based on Canada’s strong economic showing and soaring commercial showing.
Do Borrowers Need to Panic or Plan?
Borrowers should stay the course and continue to borrow or pay off debt based on their current financial structure. Saving more money or reviewing monthly expenses is always advisable, but there is no need to panic.
If you weathered the rate hike in September, then you have most likely dealt with the worst of it. 2018 will come with some challenges but there shouldn’t be too many major surprises.
Contact one of Canadalend’s home equity or mortgage experts to learn more about home equity loans or lines of credit or to better understand how the current interest rate would work with your mortgage approval.